AOL TIME WARNER FACES SHAREHOLDERS AS LEVIN 'FADES AWAY'

'Vision of a New Combined Company Got Off-track,' Chairman Says

NEW YORK (AdAge.com) -- AOL Time Warner's annual meeting, held today at Harlem's Apollo Theater, featured tributes to outgoing CEO Gerald Levin, a promise from incoming CEO Richard Parsons and apologies all around for the current state of the company's stock price.

"Difficult" was how Chairman Steve Case chose to describe the past year in the event's opening remarks. "Our AOL business and vision of a new combined company got off-track."

AOL Time Warner's weakened performance has led to significant declines in its stock, which closed today at $18.90, well off its 52-week high of $58.51.

'Short-term thinking'
Mr. Case also conceded that the company had set profit goals "too high" at the time of the merger and stood by them "too long" -- to the media giant's detriment. Such a strategy "fostered short-term thinking in the company."

won't happen on a mass scale overnight," he said. Still, he insisted "this isn't the first time people counted AOL out, and it won't be the last."

Mr. Parsons offered prescriptives in his remarks, outlining five top short-term priorities. In order, they were: revitalize AOL; restore credibility with investors, guard the integrity of the company's balance sheet; simplify financial reporting; and re-energize company employees.

Few specifics
In sum, few specifics were offered, which frustrated some of the colorful assortment of shareholders who peppered the executives with comments on topics ranging from media insensitivity to Native Americans to poor service from AOL Time Warner's customer service departments during a question-and-answer session.

Mr. Parsons, who spent time in the lobby before the event shaking hands and greeting attendees, also reprised some remarks he gave earlier this month touting the individual strengths of company segments -- all of which he said were either No. 1 or No. 2 in their peer groups -- as evidence of the company's fundamental strength. He then blamed what he termed a "collapse" in stock price to the recession and AOL-related woes.

"At the time of the merger, the outlook for AOL couldn't have been rosier," Mr. Parsons said. But "in the past 18 months, almost everything changed," most notably the deflation of the dot-com bubble and the ad recession.

In his his last speech as CEO, Mr. Levin -- tieless and wearing baggy khakis -- told shareholders "it has been a stunning ride."

"I now close my business career and just fade away," he said. As for his futire plans, he said, "I intend to walk out and go out to lunch with my wife and son Michael."